The owners of Gallatin’s historic Palace Theatre say a national cinema chain about 4 miles away is keeping them from showing newly released films, which they hoped would defray a costly equipment upgrade.

In November, a new digital projector and sound system were installed at the 100-year-old theater so that it could show new releases as the film industry transitions away from 35-millimeter distribution.

Most of the upgrade costs were covered by a $54,954 federal grant. The rest — about $14,000 — will be paid by Greater Gallatin, the nonprofit organization that owns the Palace.

The plan was to pull in more revenue by showing new releases of movies rated G or PG, or occasionally PG-13. But when Greater Gallatin Executive Director Donna Belote tried to book upcoming films, she was told by distributors that Michigan-based Neighborhood Cinema Group viewed the theater as “direct competition” and objected to the screenings.

“I was really blindsided with not being able to show new releases because of NCG,” she said. “I almost feel like I’m being strong-armed.”

Calls to NCG’s corporate office were not returned for this report.

Jay Ingrum, president of the board of Greater Gallatin, said comparing the two theaters was “apples to oranges.”

“You can look at the front (face) of both buildings — the number of screens, the number of movies shown in a day, the types of movies shown — and see we’re not in competition,” he said.

Not being able to show first-run, newly released movies makes it harder to raise money to cover the theater’s operating costs, Belote said. The Palace hasn’t shown a film, with the exception of a handful related to a traveling independent film festival, since September 2012 because of long wait times for second-run G- and PG-rated movies.

“It got to where coming out of the gate, I knew we were going to lose money,” Belote said.

The theater’s last showing was “Ice Age: The Continental Drift,” which was a second-run film. The film generated $342 in ticket sales and $185 in concessions over the span of two weekends, according to theater records.

Comparatively, when the Palace showed “Shrek 2” as a new release in May 2003 — before NCG opened in Gallatin — it made more than $5,000 in ticket sales and almost $3,000 in concessions over two weekends.

While ticket sales might not seem like much, Ingrum said every bit of revenue is important for the nonprofit, which organizes other annual community events such as Third Thursday, Square­fest and Main Street Festival in Gallatin.

“We are trying to take care of all of that as a nonprofit in an economy that is still not all the way back yet, so every bit of revenue that we can get is important to our organization,” he said.

Movies planned

Though new releases are out of reach for the theater right now, Greater Gallatin still plans to show second-run films at the Palace.

The first movie to be shown since the new equipment was installed will be “Frozen,” with screenings planned for weekends through Jan. 5.

If the showings are well-attended, Belote said, the theater will have a better chance at getting films when they are first released.

“If I have those numbers, it’ll give us more leverage (with the distribution companies), which I don’t have right now,” she said. Belote said she wants to be able to preserve the theater, which is part of the city’s history.